Over the past few weeks, institutional investors have stepped into two different situations, and defined the terms under which they will agree to tender their holdings to an offer.

In one case, the restructuring of an issue of convertible debentures issued by Aston Hill Financial, retail investors can be pleased with what the big players did. Because of their work the offer was revised, the original meeting date was cancelled and held over to next Monday.

In the other case, a $24 a share offer for the outstanding preferreds issued by RONA that was overwhelmingly endorsed by holders at a meeting Tuesday, retail investors have reason not to be satisfied. In the circular prepared for that meeting we were told that Fidelity Investments Canada, “a large institutional investor that owns a significant portion of the preferred shares, has agreed to vote,” them in favour.

It’s not known why Fidelity agreed to support the transaction given that holders were offered a $1 haircut compared with the $25 the original investors paid to get aboard. Despite repeated requests the company, which presumably has a fiduciary duty to its clients, chose not to provide reasons.

The new offer — made about eight months after the holders were offered $20 per pref — has upset the traditional structure whereby debt holders and pref share holders get paid in full before something is offered to common share holders.

At Aston Hill, institutional holders of convertible debentures showed their displeasure with the terms being offered as part of a large restructuring that will see a proposed merger with Front Street and the arrival of Joe Canavan as the new chief executive (The converts were issued in 2011 and were restructured in September 2015 to provide a higher yield and a longer term.)

As part of the latest restructuring, convertible holders were, for each $1,000 debenture, offered 1,000 shares and $600 of debentures paying 7 per cent — but with no conversion feature.

Not good enough, said the institutions.

“We got a call from the institutions who felt the debenture holders needed representation. We listened,” said Derek Slemko, chief financial officer, acknowledging “we didn’t quite get it right the first time.”

Through those discussions “we went back with an improved offer in their eyes,” added Slemko. There were two main changes: the re-inclusion of the convertible feature but at a lower strike price ($0.30 vs $0.65) and issuing more common shares than before (1,445 vs 1,000). “Now we have their support,” he said.

As well, Aston Hill was required to agree to a stricture where it is not allowed to repay the debentures in 2021 with stock. “We have given up that right and it’s a big deal,” said Slemko.

There’s a chance the RONA situation may be a one-timer if institutional investors demand changes. If that group tells the underwriters they won’t be buying such prefs unless there is stronger language indicating that what RONA — which was acquired by Lowe’s earlier this year — did must result in an automatic redemption at par. Otherwise, “there will be no teeth in these securities,” noted one investor.

There are precedents for something not as complicated as putting a guy on the moon.

Late last year Perpetual Energy did a dilutive rights offering at the same time as it repaid a maturing issue of convertibles in stock. For a couple of months there were no issues. But that changed when proper language to prevent such situations was developed.